No surprises in first advance estimate of GDP, govt expenditure crucial

Rural economy is helping consumption demand, but it is inadequate to compensate for the loss of urban demand.

First advance estimate of national income, 2020-21 pegs FY21 GDP growth at -7.7% (India Ratings & Research: -7.8%).  This is in line with RBIs assessment of -7.5% growth in FY21. It is now official that the Indian economy is having its sharpest contraction in post-Independence history. When entire economy was in lockdown for two months this was on expected lines.

Key GVA trends for 2HFY21 are:

1. Agriculture is expected to grow at same rate as in 1HFY21.
 

2. Manufacturing (1HFY21: -19.4%, 2HFY21: 0.5%), electricity (1HFY21: -1.4%, 2HFY21: 7.1%), construction (1HFY21: -30.2%, 2HFY21: 4.4%), finance (1HFY21: -6.8%, 2HFY21: